Reinventing Capitalism with Joel Solomon's 'Clean Money Revolution'

These times call for courageous new thinking. Money is perhaps our biggest blind spot. We look at it very myopically. We ignore noticing what it is doing on behalf of us. We let it do things we would never see ourselves doing.

We must find new eyes to examine our personal connections to atrocity, devastation, and torment, for people and places. Our name is on our money.

How will we take responsibility for its actions on our behalf, for our legacy to future generations?

This upheaval will remake all the systems we depend upon. In the coming decades it will transform energy, food production, buildings, transportation, infrastructure, and finance. Among other things, it may be the biggest opportunity to make money in human history.

Imagine our world three generations from now: The world of your great-grandchildren. The seeds planted in cities like Vancouver have taken root and proliferated. Industrial activity works to decarbonize the atmosphere and stabilize the climate. The oceans have been cleaned of the horrific plastic gyres now poisoning them. Farming mimics, restores, and enhances natural ecosystems. Renewable energy, smart transit, and “living buildings” are the norm. Population has stabilized at a sustainable level.

We have an economy that serves both people and planet, with everyone’s basic needs being met and abundant opportunities for meaningful work. Goods are produced in a closed-loop production cycle and the concept of waste no longer exists. Nature heals itself as we take off the pressure. It is a world of true security, no longer deeply divided between haves and have-nots.

This is the potential of the clean money revolution that is starting to rumble through our economy.

If this imagined future sounds utopian or impossible, consider how much can happen in fifty years. What was life like for your grandparents? Could they even imagine the world as it exists today? Our descendants will inhabit a world vastly different than ours. The only question is whether it will be better or worse.

My bet is that it will be better. Two massive global forces are fueling that evolution. The first is the “green” conscious consumer trend I discussed in my preface. The second is the massive wealth transfer currently underway as affluent Boomers pass their wealth to Generation X and the millennials. Occurring over the next thirty years, it’s the largest such turnover in history.

As this wave of inherited capital meets the green megatrend, the possibilities for building a regenerative economy are dazzling and inspiring.

We know we have deep and complex challenges to address. The list is long, depressing, and, to many of us, well known. Our most fundamental problem is that humanity has overreached the carrying capacity of nature. The results of overreach are all around us. Global warming, ocean acidification, widespread species extinction. Epic self-inflicted environmental damage like the BP Deepwater Horizon oil spill and the Fukushima Daiichi nuclear disaster. Dangerous externalities are too often legal, or even subsidized as part of “business as usual.” High-priced lobbying keeps tax revenues subsidizing damaging industries instead of incentivizing newer, cleaner technologies. Rather than rewarding “goods” like labor, we tax them, while allowing “bads” like pollution to happen free of charge and with impunity.

It’s a grotesque caricature of the ideal of capitalism, which is supposed to reward effort and innovation. One 2010 study by the London consultancy Trucost found that the top 3,000 corporations caused US$2.2 trillion in environmental and social damage in 2008 alone — all externalized onto the commons and untaxed.

This is madness.

We must begin to intelligently “degrowth” to reset the balance. Infinite growth is a fantasy. The Earth can no longer support our species in blindly expanding, dominating, and accumulating.

There are other profound challenges. Violence against women, human trafficking, and slavery remain rampant. Estimates say approximately 45 million people live as slaves worldwide as of 2016. Racism is resurgent in North America and Europe. These phenomena have been worsened by the sharp increase in poverty and inequity in recent decades.

From 2002 to 2010, the wealth of the world’s billionaires increased at the same rate as that of the poorest 50 percent of the population. In only five years between 2009 and 2014, the wealth of the bottom half of the global population declined — while that of the world’s billionaires doubled. Forty-eight percent of global wealth was in the hands of one percent of the population in 2014. Just 80 billionaires control the same wealth as 3.5 billion people: half the planet’s population.

For a North American perspective on inequity, the magazine Mother Jones summarized a recent Institute for Policy Studies report this way: “In 2014, Wall Street’s bonus pool was roughly double the combined earnings of all Americans working full-time jobs at minimum wage.”

Such gross inequity fuels distrust, resentment, and anger among citizens who have been left behind. They have reason to be upset. Manipulation by the powerful has steadily pushed the burden of taxation from the rich to the poor. Catastrophic market failures have further cost taxpayers trillions of dollars, and the playing field remains severely tilted in favor of the wealthiest individuals and the largest corporations. Demagogic politicians like Donald Trump use twisted rhetoric to rise on the building tide of anger. Mainstream leaders, meanwhile, fail to challenge the entrenched powers that write the rules for our financial and monetary systems.

This is a recipe for disaster, one we are currently watching unfold in politics and society. Much of our current mess can be traced to the world of finance. In three decades as an investor, entrepreneur, and change agent, I’ve more often seen money and business as the cause of problems rather than the solution. We can change that formula.

To date, money and finance have been managed under a mass-cultural state of dissociation. A gentle term would be sleepwalking; a more accurate one would be a mental disconnect, a kind of insanity. The mainstream mindset that money and investments are somehow value-neutral is the root of the problem. We give our money to managers, banks, retirement funds, insurance carriers, and others to invest in products and practices we would be horrified to claim as our own work. Our major institutions are complicit in this hypnosis of human spirit that is stealing the future.

Waking up from this state and reforming our economic system would be intelligent, functional, and offer a soft landing. Money can be a powerful driver of long-term resilience and a more just world. It’s our choice. If we do nothing, change will be forced upon us. It will be radical, painful, and lead to unknown, dangerous consequences.

Bleak? Hopeless? Thankfully, no.

The $100 trillion question

In the two countries considered in this book, Canada and the United States, the affluent amount to about 70 million people. These families are going to hand over between $30 and $50 trillion to the next generation. Worldwide, the total transfer is closer to $100 trillion.

Will these riches be used to further exploit the poor and fund greater destruction of the planet? Or will they be used to create a clean money future and a resilient civilization?

We are smart enough to choose and successfully travel the second path. Our dominant system of capitalist democracy has reached its limits. Now it must be reformed. We can turn our ingenuity to living intelligently and beautifully within Earth’s limits. To coexisting with each other and with wild creatures and ecosystems. We can find joy and meaning beyond unlimited consumption. The wealth that has perpetuated injustice can transform the world.

The clean money revolution is on!

Joel Solomon is Chairman of Renewal Funds, a $98-million mission venture capital firm. He has invested in over 100 early-growth stage companies in North America, delivering above-market returns while catalyzing positive social and environmental change. Solomon spent ten years building businesses in Nashville's deteriorating urban core, where he co-founded Village Real Estate, CORE development, and the Bongo Java chain of coffee houses.

Solomon is a founding member of the Social Venture Network, Business for Social Responsibility, Tides Canada, and is Board Chair of Hollyhock. He a Senior Advisor to RSF Social Finance in San Francisco.